Over­seas ser­vice

China Life plans to di­ver­sify port­fo­lio in­ter­na­tion­ally.

China Life In­surance Co Ltd will boost its over­seas in­vest­ment pro­por­tion by widen­ing the in­vest­ment scope of prop­er­ties and in­creas­ing stake in­vest­ment in un­listed com­pa­nies, the in­surer’s top man­age­ment said on Fri­day.

The in­surer’s first-half profit slumped 67 per­cent as the stock-mar­ket de­cline dragged down in­vest­ment re­turns and re­serves rose. The com­pany’s over­all in­vest­ment re­turn stood at 4.36 per­cent at the end of June, down 9.34 per­cent from the same pe­riod of last year, it said in a state­ment to the Shang­hai Stock Ex­change on Thurs­day.

The bench­mark Shang­hai Com­pos­ite In­dex tum­bled 17 per­cent in the first half, amid an eco­nomic slow­down, hurt­ing the value of Chi­nese in­sur­ers’ stock hold­ings and caus­ing a slump in their com­bined prof­its.

“It is not likely that there will be an im­pres­sive im­prove­ment in the in­vest­ment re­turn in the fol­low­ing six months, based on our fore­cast of the cap­i­tal mar­ket. We will in­crease the hold­ings of fixed-in­come prod­ucts and over­seas in­vest­ments,” said Zhao.

The coun­try’s big­gest life in­surer’s over­seas in­vest­ment has reached $7.6 bil­lion, which is 2 per­cent of the in­surer’s to­tal as­sets. The ex­ist­ing ceil­ing set by the industry reg­u­la­tor is 15 per­cent, in­di­cat­ing the com­pany still has much lee­way in this re­gard. Most of China Life’s over­seas in­vest­ments, around 9 bil­lion yuan ($1.35 bil­lion), was put into the prop­erty sec­tor.

“We will ex­pand our in­vest­ment from of­fice build­ings in key gate­way cities with a steady rent in­come to lo­gis­tics, re­tail and ho­tels,” said Zhao.

China Life has taken a siz­able but undis­closed stake in a land­mark New York of­fice block this year, in a deal worth $1.65 bil­lion. The in­surer is be­lieved to be the largest in­vestor in 1285 Sixth Av­enue in Man­hat­tan, in a trans­ac­tion led by US devel­oper RXR Realty LLC, ac­cord­ing to me­dia re­ports.

Ac­cord­ing to Grant Ji, ex­ec­u­tive di­rec­tor of cap­i­tal mar­kets for north­ern China at CBRE Group, more life in­surance com­pa­nies are in­ter­ested in in­vest­ing in for­eign real es­tate to earn sta­ble rental yields and to di­ver­sify their in­vest­ment port­fo­lio.

“It is a nat­u­ral choice for them, given the sharp volatil­ity of the do­mes­tic A-share mar­ket and the de­pre­ci­a­tion pres­sure on the yuan,” said Ji.

Other ma­jor in­sur­ers such as New China Life In­surance Co and China Pa­cific In­surance (Group) Co, which are due to re­port in­terim re­sults later this­month, have fore­cast profit de­clines larger than 40 per­cent. Ping An In­surance (Group) Co, which is more di­ver­si­fied in its busi­ness port­fo­lio, last week reported an 18 per­cent in­crease in net in­come for the pe­riod, partly due to ris­ing earn­ings from its bank­ing arm.

We will in­crease the hold­ings of fixed-in­come prod­ucts and over­seas in­vest­ments.” Zhao Li­jun, vice-pres­i­dent of China Life

SHI YAN / FOR CHINA DAILY

A branch of China Life In­surance Co Ltd in Haikou, cap­i­tal of Hainan prov­ince.